Showing papers by "London School of Economics and Political Science published in 2003"

The International HapMap Project

Abstract: The goal of the International HapMap Project is to determine the common patterns of DNA sequence variation in the human genome and to make this information freely available in the public domain. An international consortium is developing a map of these patterns across the genome by determining the genotypes of one million or more sequence variants, their frequencies and the degree of association between them, in DNA samples from populations with ancestry from parts of Africa, Asia and Europe. The HapMap will allow the discovery of sequence variants that affect common disease, will facilitate development of diagnostic tools, and will enhance our ability to choose targets for therapeutic intervention.

Disentangling the Incentive and Entrenchment Effects of Large Shareholdings

Abstract: This article disentangles the incentive and entrenchment effects of large ownership. Using data for 1,301 publicly traded corporations in eight East Asian economies, we find that firm value increases with the cash-flow ownership of the largest shareholder, consistent with a positive incentive effect. But firm value falls when the control rights of the largest shareholder exceed its cash-flow ownership, consistent with an entrenchment effect. Given that concentrated corporate ownership is predominant in most countries, these findings have relevance for corporate governance across the world.

Buzz: Face-to-Face Contact and the Urban Economy

Abstract: This paper argues that existing models of urban concentrations are incomplete unless grounded in the most fundamental aspect of proximity; face-to-face contact. Face-to-face contact has four main features; it is an efficient communication technology; it can help solve incentive problems; it can facilitate socialization and learning; and it provides psychological motivation. We discuss each of these features in turn, and develop formal economic models of two of them. Face-to-face is particularly important in environments where information is imperfect, rapidly changing, and not easily codified, key features of many creative activities.

Micro-Foundations of Urban Agglomeration Economies

Abstract: This handbook chapter studies the theoretical micro-foundations of urban agglomeration economies. We distinguish three types of micro-foundations, based on sharing, matching, and learning mechanisms. For each of these three categories, we develop one or more core models in detail and discuss the literature in relation to those models. This allows us to give a precise characterisation of some of the main theoretical underpinnings of urban agglomeration economies, to discuss modelling issues that arise when working with these tools, and to compare different sources of agglomeration economies in terms of the aggregate urban outcomes they produce as well as in terms of their normative implications.

Regions and Powers: The Structure of International Security

Abstract: Part I. Introduction: Developing a Regional Approach to Global Security: 1. Theories and histories about the structure of contemporary international security 2. Levels: distinguishing the regional from the global 3. Security complexes: a theory of regional security Part II. Asia: 4. South Asia: inching towards internal and external transformation 5. Northeast and southeast Asian security complexes during the Cold War 6. The 1990s and beyond: an emergent east Asian complex Conclusion Part III. The Middle East and Africa: Introduction 7. The Middle East: a perennial conflict formation 8. Sub-saharan Africa: security dynamics in a setting of weak and failed states Conclusions Part IV. The Americas: 9. North America: the sole superpower and its surroundings 10. South America: an under-conflictual anomaly? Conclusion: scenarios for the RSCs of the Americas Part V. The Europes: Introduction: 11. EU-Europe: the European Union and its 'near abroad' 12. The Balkans and Turkey 13. The post-Soviet space: a regional security complex around Russia Conclusion: scenarios for the European supercomplex Part VI. Conclusions: 14. Regions and powers: summing up and looking ahead 15. Reflections on conceptualising international security.

Global Games: Theory and Applications

Abstract: Many economic problems are naturally modeled as a game of incomplete information, where a player’s payoff depends on his own action, the actions of others, and some unknown economic fundamentals. For example, many accounts of currency attacks, bank runs, and liquidity crises give a central role to players’ uncertainty about other players’ actions. Because other players’ actions in such situations are motivated by their beliefs, the decision maker must take account of the beliefs held by other players. We know from the classic contribution of Harsanyi (1967–1968) that rational behavior in such environments not only depends on economic agents’ beliefs about economic fundamentals, but also depends on beliefs of higher-order – i.e., players’ beliefs about other players’ beliefs, players’ beliefs about other players’ beliefs about other players’ beliefs, and so on. Indeed, Mertens and Zamir (1985) have shown how one can give a complete description of the “type” of a player in an incomplete information game in terms of a full hierarchy of beliefs at all levels. In principle, optimal strategic behavior should be analyzed in the space of all possible infinite hierarchies of beliefs; however, such analysis is highly complex for players and analysts alike and is likely to prove intractable in general. It is therefore useful to identify strategic environments with incomplete information that are rich enough to capture the important role of higher-order beliefs in economic settings, but simple enough to allow tractable analysis. Global games, first studied by Carlsson and van Damme (1993a), represent one such environment. Uncertain economic fundamentals are summarized by a state θ and each player observes a different signal of the state with a small amount of noise. Assuming that the noise technology is common knowledge among the players, each player’s signal generates beliefs about fundamentals, beliefs about other players’ beliefs about fundamentals, and so on. Our purpose in this paper is to describe how such models work, how global game reasoning can be applied to economic problems, and how this analysis relates to more general analysis of higher-order beliefs in strategic settings.

A dynamical model for generating synthetic electrocardiogram signals

Abstract: A dynamical model based on three coupled ordinary differential equations is introduced which is capable of generating realistic synthetic electrocardiogram (ECG) signals. The operator can specify the mean and standard deviation of the heart rate, the morphology of the PQRST cycle, and the power spectrum of the RR tachogram. In particular, both respiratory sinus arrhythmia at the high frequencies (HFs) and Mayer waves at the low frequencies (LFs) together with the LF/HF ratio are incorporated in the model. Much of the beat-to-beat variation in morphology and timing of the human ECG, including QT dispersion and R-peak amplitude modulation are shown to result. This model may be employed to assess biomedical signal processing techniques which are used to compute clinical statistics from the ECG.

Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment

Abstract: Lack of access to finance is often cited as a key reason why poor people remain poor. This paper uses data on the Indian rural branch expansion program to provide empirial evidence on this issue. Between 1977 and 1990, the Indian Central Bank mandated that a commercial bank can open a branch in a location with one or more bank branches only if it opens four in locations with no bank branches. We show that between 1977 and 1990 this rule caused banks to open relatively more rural branches in Indian states with lower initial financial development. The reverse is true outside this period. We exploit this fact to identify the impact of opening a rural bank on poverty and output. Our estimates suggest that the Indian rural branch expansion program significantly lowered rural poverty, and increased non-agricultural output.

The politics of europeanization

Abstract: THEORISING EUROPEANIZATION 1. Introduction: In the name of Europe 2. The Europeanization of public policy 3. Conceptualising the domestic impact of Europe COMPARING INSTITUTIONAL CONTEXTS 4. Meeting the demands of EU membership: The Europeanization of national administrative systems 5. Variable geometry, multi-level governance: European integration and sub-national government in the new Millenium 6. Europeanization in comparative perspective: Institutional fit and national adaptation EUROPEANISATION AND POLICY ANALYSIS 7. Europeanization as interpretation, trnslation, and editing of public policies 8. Europeanization as Convergence: the regulation of media markets in the European Union 9. The impact of the European Union on environmental policies INTEREST GROUPS AND EUROPEANISATION 10. Europeanization and organisational change in national trade associations 11. Differential Europeanization: large and small firms in the EU policy process UNDERSTANDING 'EUROPE' AS A POLICY MODEL 12. The idea of the European social model: Limits and paradoxes of Europeanisation 13. Europeanisation goes east: power and uncertainty in the EU accession process CONCLUSIONS 14. Conclusions: A conversant research agenda

The convergent validity of two burnout instruments: A multitrait-multimethod analysis.

Abstract: Summary This study examined the factorial and convergent validity of the OLdenburg Burnout Inventory (OLBI) and the Maslach Burnout Inventory - General Survey (MBI-GS) among 232 Greek employees fro...

Auditing and the production of legitimacy

Abstract: This essay discusses an important series of formative contributions to contextualist and critical research in auditing. A small number of relatively recent papers question rationalized accounts of the audit process and explore the complex ‘back stage’ of practice. These papers are interpreted as contributions to our understanding of the production of legitimacy around four substantive themes: the audit process and formal structure; auditing as a business; working papers and image management; new audits. The papers also point to the socially constructed nature of professional inference and suggest a fruitful basis for taking these research efforts forward.

Inequality in the Early Cognitive Development of British Children in the 1970 Cohort

Abstract: This paper develops an index of development for British children in the 1970 cohort, assessed at 22 months, 42 months, 5 years and 10 years. The score at 22 months predicts educational qualifications at age 26 and is related to family background. The children of educated or wealthy parents who scored poorly in the early tests had a tendency to catch up, whereas children of worse-off parents who scored poorly were extremely unlikely to catch up and are shown to be an at-risk group. There is no evidence that entry into schooling reverses this pattern.

The Limits of Delegation: Veto Players, Central Bank Independence, and the Credibility of Monetary Policy

Abstract: Governments unable to make credible promises hinder economic development and effective policy making. Scholars have focused considerable attention on checks and balances and the delegation of authority to independent agencies as institutional solutions to this problem. The political conditions under which these institutions enhance credibility, rather than policy stability, are still unclear, however. We show that checks – multiple veto players – enhance credibility, depending on the extent of uncertainty about the location of the status quo, on how agenda control is allocated among the veto players, and on whether veto players have delegated policy making authority to independent agencies. In the context of monetary policy and independent central banks, we find evidence supporting the following predictions: delegation is more likely to enhance credibility and political replacements of central bank governors are less likely in the presence of multiple political veto players; this effect increases with the polarization of veto players.

'High-performance' Management Practices, Working Hours and Work-Life Balance

Abstract: The effects of selected high-performance practices and working hours on work-life balance are analysed with data from national surveys of British employees in 1992 and 2000. Alongside long hours, which are a constant source of negative job-to-home spillover, certain 'high-performance' practices have become more strongly related to negative spillover during this period. Surprisingly, dual-earner couples are not especially liable to spillover - if anything, less so than single-earner couples. Additionally, the presence of young children has become less important over time. Overall, the results suggest a conflict between high-performance practices and work-life balance policies.

The Regulation of Labor

Abstract: We investigate the regulation of labor markets through employment laws, collective bargaining laws, and social security laws in 85 countries. We find that richer countries regulate labor less than poorer countries do, although they have more generous social security systems. The political power of the left is associated with more stringent labor regulations and more generous social security systems. Socialist and French legal origin countries have sharply higher levels of labor regulation than do common law countries, and the inclusion of legal origin wipes out the effect of the political power of the left. Heavier regulation of labor is associated with a larger unofficial economy, lower labor force participation, and higher unemployment, especially of the young. These results are difficult to reconcile with efficiency and political power theories of institutional choice, but are broadly consistent with legal theories, according to which countries have pervasive regulatory styles inherited from the transplantation of legal systems.

Evolutionary algorithm based offline/online path planner for UAV navigation

Abstract: An evolutionary algorithm based framework, a combination of modified breeder genetic algorithms incorporating characteristics of classic genetic algorithms, is utilized to design an offline/online path planner for unmanned aerial vehicles (UAVs) autonomous navigation. The path planner calculates a curved path line with desired characteristics in a three-dimensional (3-D) rough terrain environment, represented using B-spline curves, with the coordinates of its control points being the evolutionary algorithm artificial chromosome genes. Given a 3-D rough environment and assuming flight envelope restrictions, two problems are solved: i) UAV navigation using an offline planner in a known environment, and, ii) UAV navigation using an online planner in a completely unknown environment. The offline planner produces a single B-Spline curve that connects the starting and target points with a predefined initial direction. The online planner, based on the offline one, is given on-board radar readings which gradually produces a smooth 3-D trajectory aiming at reaching a predetermined target in an unknown environment; the produced trajectory consists of smaller B-spline curves smoothly connected with each other. Both planners have been tested under different scenarios, and they have been proven effective in guiding an UAV to its final destination, providing near-optimal curved paths quickly and efficiently.

Political Topographies of the African State: Territorial Authority and Institutional Choice

Abstract: Catherine Boone examines political regionalism in Africa and how it affects forms of government, and prospects for democracy and development. Boone's study is set within the context of larger theories of political development in agrarian societies. It features a series of compelling case studies that focus on regions within Senegal, Ghana, and Cote d'Ivoire and ranges from 1930 to the present. The book will be of interest to readers concerned with comparative politics, Africa, development, regionalism and federalism, and ethnic politics. Multi-country study of politics and political development in Africa. Book places African political development in the mainstream of studies of state-formation in agrarian studies. Study combines macrosociology with choice-theoretic perspectives in Political Science.

Price Stability in Open Economies

Abstract: This paper studies the conditions under which price stability is the optimal policy in a two-country open-economy model with imperfect competition and price stickiness. Special conditions on the levels of country-specific distortionary taxation and the intratemporal and intertemporal elasticities of substitution need to be satisfied. These restrictions apply to both cooperative and non-cooperative settings. Most importantly, we show that cooperative and non-cooperative solutions do not coincide despite market completeness and producer currency pricing. In this framework, our analysis suggests a role for international policy coordination.

A New Approach to Explaining Fertility Patterns: Preference Theory

Abstract: Changing patterns of family life and declining fertility in modern societies have attracted substantial research attention and policy debate yet we seem no nearer to a full understanding of current trends nor to explanations that are adequate enough to provide the basis for predictions. Preference theory was elaborated by the author in Work-Lifestyle Choices in the 21st Century (2000). This article shows how it provides a new theoretical framework for understanding current changes in modern societies and for predicting future developments; constitutes a qualitative break from economic theories of fertility change; and provides an alternative basis for the development of family policy. It presents findings from a national survey in Britain designed to test preference theory’s predictions regarding fertility and employment with positive results. (authors)

Measuring Over‐education

Abstract: Previous work on over-education has assumed homogeneity of workers and jobs. Relaxing these assumptions, we find that over-educated workers have lower education credentials than matched graduates. Among the over-educated graduates we distinguish between the apparently over-educated workers, who have similar unobserved skills as matched graduates, and the genuinely over-educated workers, who have a much lower skill endowment. Over-education is associated with a pay penalty of 5%–11% for apparently over-educated workers compared with matched graduates and of 22%–26% for the genuinely over-educated. Over-education originates from the lack of skills of graduates. This should be taken into consideration in the current debate on the future of higher education in the UK.

R&D and Absorptive Capacity: Theory and Empirical Evidence*

Abstract: This paper presents a single unified framework that integrates the theoretical literature on Schumpeterian endogenous growth and major strands of the empirical literature on R&D, productivity growth and productivity convergence. Starting from a structural model of endogenous growth following Aghion and Howitt (1992, 1998), we provide microeconomic foundations for the reduced-form equations for total factor productivity (TFP) growth frequently estimated empirically using industry-level data. R&D affects both innovation and the assimilation of others' discoveries ("absorptive capacity"). Long-run cross-country differences in productivity emerge endogenously, and the analysis implies that many existing studies underestimate R&D's social rate of return by neglecting absorptive capacity.

Children's Use of the Internet: Reflections on the Emerging Research Agenda

Abstract: As domestic access to the internet reaches the mass market in industrialized countries, this article identifies and evaluates the emerging research agenda, focusing particularly on children and young people. The nature of children's internet use generates public anxieties which both guide and undermine research, complicating the already challenging study of children within the privacy of the home. The body of empirical work reviewed is still small, but already key questions of academic and policy significance are being addressed regarding the opportunities and dangers of internet use. Such opportunities include communication, identity and participation, and education, learning and literacy; dangers arising from exclusion and the digital divide, and from certain kinds of use relating to inappropriate or undesirable contact, content and commercialism. In each of these domains, research strengths and gaps for future research are identified. The article concludes by noting areas of theoretical consensus and u...

‘High-performance’ Management Practices, Working Hours and Work–Life Balance

Abstract: The effects of selected high-performance practices and working hours on work–life balance are analysed with data from national surveys of British employees in 1992 and 2000. Alongside long hours, which are a constant source of negative job-to-home spillover, certain ‘high-performance’ practices have become more strongly related to negative spillover during this period. Surprisingly, dual-earner couples are not especially liable to spillover — if anything, less so than single-earner couples. Additionally, the presence of young children has become less important over time. Overall, the results suggest a conflict between high-performance practices and work-life balance policies.

Consistent Testing for Stochastic Dominance under General Sampling Schemes

Abstract: We propose a procedure for estimating the critical values of the extended Kolmogorov- Smirnov tests of First and Second Order Stochastic Dominance in the general K-prospect case. We allow for the observations to be serially dependent and, for the first time, we can accommodate general dependence amongst the prospects which are to be ranked. Also, the prospects may be the residuals from certain conditional models, opening the way for conditional ranking. We also propose a test of Prospect Stochastic Dominance. Our method is subsampling; we show that the resulting tests are consistent and powerful against some N|1/2 local alternatives even when computed with a data-based subsample size. We also propose some heuristic methods for selecting subsample size and demonstrate in simulations that they perform reasonably. We show that our test is asymptotically similar on the entire boundary of the null hypothesis, and is unbiased. In comparison, any method based on resampling or simulating from the least favorable distribution does not have these properties and consequently will have less power against some alternatives.

The Spatial Distribution of Economic Activities in the EU

Abstract: This Paper considers the spatial distribution of economic activities in the European Union It has three main aims: (i) to describe the data that is available in the EU and give some idea of the rich spatial data sets that are fast becoming available at the national level; (ii) to present descriptive evidence on the location of aggregate activity and particular industries and to consider how these location patterns are changing over time; (iii) to consider the nature of the agglomeration and dispersion forces that determine these patterns and to contrast them to forces acting elsewhere, in particular the US Our survey suggests that much has been achieved in the wave of empirical work that has occurred in the past decade, but that much work remains to be done

Market Timing and Managerial Portfolio Decisions

Abstract: This paper provides evidence that top managers have contrarian views on firm value. Managers' perceptions of fundamental value diverge systematically from market valuations, and perceived mispricing seems an important determinant of managers' decision making. An analysis of insider trading patterns shows that low valuation (value) firms are regarded as undervalued by their own managers relative to high valuation (growth) firms. This finding is robust to controlling for non-information motivated trading. Managers in value firms actively purchase additional equity on the open market despite substantial prior exposure to firm risk through stock and option holdings, equity-based compensation and firm-specific human capital. Further evidence links managers' private portfolio decisions directly to changes in corporate capital structures, suggesting that managers actively time the market both in their private trades and in firm-wide decisions. Keywords: Market timing, Insider trading

Inference in ARCH and GARCH models with heavy-tailed errors

Abstract: ARCH and GARCH models directly address the dependency of conditional second moments, and have proved particularly valuable in modelling processes where a relatively large degree of fluctuation is present. These include financial time series, which can be particularly heavy tailed. However, little is known about properties of ARCH or GARCH models in the heavy–tailed setting, and no methods are available for approximating the distributions of parameter estimators there. In this paper we show that, for heavy–tailed errors, the asymptotic distributions of quasi–maximum likelihood parameter estimators in ARCH and GARCH models are nonnormal, and are particularly difficult to estimate directly using standard parametric methods. Standard bootstrap methods also fail to produce consistent estimators. To overcome these problems we develop percentile–t, subsample bootstrap approximations to estimator distributions. Studentizing is employed to approximate scale, and the subsample bootstrap is used to estimate shape. The good performance of this approach is demonstrated both theoretically and numerically.

Can information and communications technology applications contribute to poverty reduction? Lessons from rural India

Abstract: Information and Communications Technology (ICT) can reduce poverty by improving poor people's access to education, health, government and financial services. ICT can also help small farmers and artisans by connecting them to markets. It is clear that in rural India -as well as in much of the developing world- realization of this potential is not guaranteed. This paper outlines a sample model to explain why a digital divide may exist between rich and poor. Low-cost access to information infrastructure is a necessary prerequisite for the successful use of ICT by the poor, but it is not sufficient. The implementation of ICT projects needs to be performed by organizations and individuals who have the appropriate incentives to work with marginalized groups. Furthermore, grassroots intermediaries and the involvement of the community are identified as the key factors that foster local ownership and the availability of content and services that respond to the most pressing needs of the poor.